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-   -   Welcome Young Dreamers! (https://www.early-retirement.org/forums/f30/welcome-young-dreamers-14064.html)

BigMoneyJim 07-16-2003 10:03 PM

Welcome Young Dreamers!
Thanks to Dory36--also known as Cap'n Bill--for creating this Young Dreamers' forum!

Several recent--and some not so recent--posters are interested in FI/RE but have a number of years before reaching retirement. Here we can discuss some of the things that those closer to or into retirement don't like, such as the dreaded words "work", "job", "career" and "debt".

I've probably described myself at least once or twice in these forums already, but here goes again for the Young Dreamers' forum:

I'm 33, never been married and have no kids, but I think it's fairly likely I'll marry and have kids in the future, although I don't have any potential wives at the moment. I feel lucky more than smart that I started contributing the maximum allowable percentage to my 401(k) when I was 21.

I say lucky because I really didn't understand it all; my boss had me watch a video about benefits, and there was a graph comparing two hypothetical people. I forget the exact numbers, but one person contributed $x per paycheck into his 401(k) starting at age 25 and stopping at age 35. The second person contributed the same amount starting at age 35 and continuing until retirement. Both retired at age 60, but person 1 who only contributed for 10 years had two or three times as much money as person 2! That was enough for me, I figured I'd understand later it and thank myself later, and I was right.

In my early twenties I continued working part time and going to college part time. I ate out frequently, bought toys but always had enough money. I tried saving, but every time I saved $1000 I would spend a big chunk of it. I got a credit card just "to build up credit" and sometimes bought things and carried a little balance.

As I became a professional in my mid twenties I earned more and more, but I spent more and more, also. In fact the more I made the less disposable cash I had. My credit rating and credit card debt also increased. I got a nicer apartment and a nearly-new truck, and suddenly I had to start watching what I spent on a semimonthly basis because I had no spare money!

I turned 30, burned out in my job and quit to join a start-up company with big ideas and stock options. It quickly went out of business. I had a few thousand dollars in cash and a few more thousand in debt, but I thought I'd take a couple of months off before searching for work again.

Naturally my industry--IT--crashed and I had trouble finding a job after running out of cash, and I more than doubled my debt keeping up with my credit card payments and truck payments while looking for work.

During this time I read several personal finance books because I knew I had to change. I balanced my 401(k)/Rollover IRA to my liking with my newfound knowledge. I found a finance web site with many message forums, among which I found the Retire Early Home Page forum and site which planted the idea that I don't have to work until 62 (or 67 for us young'uns I think) to retire. I liked that idea!

A desperation retail job and another shaky startup and 18 months later I went back to the company I quit when I turned 30. I had to move to a different state, but they made the salary worth my while. But I bought an older, smaller car and sold the truck. I rented a fairly nice but small and reasonable apartment. I reduced my spending a fair amount (but still have fun) and started paying off the debt aggresively while still contributing some to my 401(k).

I was tempted more than once to cash out a large portion of the 401(k)/IRA to pay off my debts, but each time I did the calculations the tax penalties weren't worth it, and I was afraid I'd fall into my old spending habits if I took the 'easy' way out.

As it stands now I'll have the credit card debt paid off by June 2004 if nothing unexpected happens. I'll still owe on the car, but it's an interest-free loan from a relative.

I haven't been debt-free and financially smart before. I look forward to it. I'm planning to rapidly build up several months of living expenses in a money market mutual fund account at Vanguard. I'll also do some long term investing both tax-deferred and in non-shelted accounts. I like Vanguard mutual funds a lot, but I may try to pick some individual stocks someday. I'll also have between 5% and 20% in bond funds. I've been nearly 100% equities so far but am slowly getting a little more conservative.

I haven't started doing any calculations yet about how far from retirement I might be, but I suspect it's about 15 years. Maybe 10, maybe 20. I really need to be debt-free for a few months before I really know what my savings rates will be. Then again I might get married and that could throw a wrench into the works.

I don't expect everyone to post their life financial stories, but I thought posting mine might inspire some discussion.

_________________________________________________( Edited to change "my own spending habits" to "my old spending habits"...was a typo)

panhead 07-17-2003 06:53 AM

Re: Welcome Young Dreamers!
Yup, thanks Cap'n Bill for the new forum, we needed it ! Also thanks BigMoneyJim for the excellent post. I'll attempt to do the same, but probably not as eloquently !

Let's see, I'm 33 years old and have always had a mind to save a bit of $$$$, even when I was young. My parents are older, old enough to vaguely remember parts of the depression and influenced much of my spending habits, I would imagine.

Anyway, I worked part time and went to school as well. Never got in much credit card debt, had some help from the folks as well. While I worked part time I contributed to a 401k plan since I was 21. It wasn't a lot of money, but hey, it was a start. My dad helped me pick some funds, and I left it on auto pilot until I got out of school in my mid 20's and got my first job in engineering.

So, new job, making pretty good cake, rolled my old 401k into my new jobs plan and maxed out that 401k. My girlfriend and I rented a little (I stress little here, about 700 sqft) house for $700/month and split the rent. I was making plenty to cover expenses, and driving an old truck that I kept running much longer than I should have ;-). Did this for a couple of years, got an offer at another company for better than twice the pay, and jumped at it. They had an espp which is a good deal, so I maxed it and my 401k out, now 32% of my income gone from the get go. I was already into some taxable investments, and now added more and more to them, mainly vanguard index, but also got burned on some Janus funds I still hold for entertainment value (jawwx and javlx). About this time my girlfriend and I broke up, and the house I was renting got sold, so I found a little foreclosure house, very very cheap, cheaper than rent, but it needed a lot of work. I bought this and moved an old buddy in with me who did carpentry/electrical work. He fixed up the house and I didn't charge him rent. He's was in the reserves and is now in Iraq (good luck, bro) so I moved another one of my buddies in and he is paying half of my $500/month mortgage.

That's pretty much where I am now, I've got a real nice nest egg saved up, got plenty of toys (Harleys mainly, some cars, it's my hobby) I travel quite a bit for work and play (going to Amsterdam soon in August!!), have lots of friends and generally have a hell of a time while I save for that "walk away" day. I figure I can do it in five years, if things keep on this way, but as BMJ said, if I get married or have kids or both, who knows. Anything can happen, and I'll roll with it when it does.

OK, I've bored everyone enough ! Thanks to Dory and Intrcst again for all of the info they have both offered, and for nuthin !!

Keep the shiny side up !!!


txdoc 07-19-2003 03:12 PM

Re: Welcome Young Dreamers!

Great posts. I'm new to the forum; but have been following the websites/calculators for a while.

Summary on me: I'm an immigrant; arrived in the US at age 18. Went to college and med school on my own budget, plus some loans from Uncle Sam. Finished my residency 3 yrs ago (after 12 years of post-high school training). I have a family of 4 (including me). High salary (500k) but I'm definitely LBYM type. So, after 40% taxes and 10% living expenses, I can save about 250k per yr. Hoping to FIRE in about 3 yrs, before I get sued and go broke.

Persuing a medical career is a huge investment in terms of time and money. But if one is disciplined, FI/RE goals can be achieved in less than 10 yrs after completing training.

haha 07-19-2003 03:31 PM

Re: Welcome Young Dreamers!

salary (500k)
Your salary is $500K!! What kind of doctor are you? I want to tell my daughter to marry one, whatever it is.


txdoc 07-20-2003 01:11 PM

Re: Welcome Young Dreamers!

Your salary is $500K!! What kind of doctor are you? I want to tell my daughter to marry one, whatever it is.


Well, I had to work about 50% more than many of my colleagues to achieve *500k (that BTW also includes 40k pre-tax in profit sharing plan). *I have my own practice; and I don't take vacation. *I'm on call 24/7/365. *You get the idea. *However, with malpractice premiums doubling to trippling every year, govt/Medicare threatening to send doctors to prison for even minor clerical errors in monumental amount of paperwork that they require, and chances of being sued by malpractice lawyers increasing yr after yr, I'm just planning to work hard now and RE.

As for what kind of doctor, let me just mention the kinds of doctors that would make that amount of $ or more, given the same amount of work that I'm doing: orthopedic surgery, cardiac surgery, plastic surgery, cardiology, ENT, ophthalmology, among others.

haha 07-20-2003 05:18 PM

Re: Welcome Young Dreamers!
Thanks, TX Doc. I'l advise her to steer clear of pediatricians, etc.

And congrats to you.


bushwacker 07-20-2003 05:54 PM

Re: Welcome Young Dreamers!
I like hearing everyone's story, so I will throw mine out there and try to keep the ball rolling.

I am a 34 year old SINK (single income, no kids), and I guess you could say I have already retired once. After graduating college I worked 3 years while living at home with the parents. It may not have been "cool", but it gave me a pile of cash. It was a great company, and most people stayed 30 years with a very comfortable retirement. I guess that is what scared me. I wanted something more than just 30 years and out, so I left. I spent most days staying up late, sleeping in, and playing golf. I've always thought we have the work-retirement thing backwards! ;D

Anyway, after a few years, the capitalist urges overcame the slacker urges. So I went job-hunting. But this time, I declared, I was only going to pursue something that sounded fun, no matter what the pay. I hopped around a few times, but eventually landed in the perfect job for me. I love it, make great money, and have lots of independence. In fact, I think I can retire in a few years, but I feel like I would be a fool to give it up.

But that brings me to my little bit of advice. Bottom line is I would encourage anyone to follow your passions now rather than having regrets later. If you keep looking, eventually you will find what makes you happy. I may have been somewhat better off financially if I had stayed where I was. But I would have missed out on a lot of great experiences. And I don't think I would have been nearly as happy.

What is your story?

BigMoneyJim 07-20-2003 06:39 PM

Re: Welcome Young Dreamers!
bushwacker, that is an interesting story. I lived with my mother a bit longer than I think is usual, but I spent the extra dough instead of saving it. :-[

I'm very interested in your story. I've often thought it would be nice, and maybe even possible, to go through life in fun jobs. But as I've said elsewhere the ER norm seems to be saving with a full-time job as highly paid as possible and then retiring with a large nest egg.

Did potential employers dislike that you had not worked for a period of time? What did you tell them about that time? Is your fun job entry level, or did you leverage some college and/or experience to get a bit more compensation?

Also, if you should fall for someone and get married, how do you think that might affect your FI/RE situation? (After finishing my post and rereading yours I realize you said "single income" which is not necessarily "single". So this question may not be valid.)

My experience so far about most things in life--including jobs--is that I do better taking advantages of the opportunites that present themeslves to me, often from an unexpected place. When I do that, things generally turn out very well. When I try to decide on a direction ahead of time things generally go much more poorly, but perhaps I've been doing something wrong, or perhaps it's related to personality types.

bushwacker 07-20-2003 08:25 PM

Re: Welcome Young Dreamers!
When I "retired" the first time, I had the pie-in-the-sky goal of trying to make it on the PGA tour. I was pretty good, and everyone encouraged me to give it a try. I did, and I don't regret it, even though I knew it was a long shot. Maybe I just used it as an excuse to enjoy life a little before getting too bogged down in a career. If nothing else, it helps in my current job, since customers seem to enjoy playing golf with me. To answer your question, that is what I tell prospective employers about that gap in employment. They respected me going after my dreams, and sometimes I saw a gleam in their eyes hinting that they wish they had done it as well. With the career paths these days, employers don't seem to mind people moving around a lot. In fact, I think they encourage it. They seem to like a diverse background as opposed to a pinhole career path, depending of course on the industry.

I did start out this career at a semi-entry level position 7 years ago. It did not pay very much. But I try to dedicate myself fully to whatever I pursue, and I have been able to average about a 12% raise/year since then. Good enough to keep me happy.

So I guess technically mine was not a retirement, but then again I don't really like the word retirement anyway. That sounds too much like something people do right before they die. I like to think of ER as just being financially and emotionally able to do something just because you want to, not because you have to. I have a long list of jobs I'd like to try out someday. But you are right. It is hard to give up a good-paying gig. Since I really do enjoy my job right now, it's not a problem. I hope to do it about 5 more years and re-evaluate then. But the great thing about being a saver is that it gives you the freedom to leave if the job ever becomes a drag. In fact, I think that sense of freedom makes any job more enjoyable. As they say, "Work like you don't need the money".

I am still single. If I do walk down the aisle, I guess it could have a big affect on all of this. But I hope I have the sense to marry someone who has the same values and goals as I do. Heck, it might make things easier with two incomes. ;)

Anyway, even with marriage, I don't think I want to have kids. Not because of the expense, but just because I don't get into parenting like most people. I know, I know, everyone says it is the best thing that ever happened to them, changed their life, etc.....But I just don't get all goo-goo eyed and excited when somebody brings out their baby. It does nothing for me. And I don't think anyone should be a parent unless they are 100% committed to it. I don't think this makes me a bad person, but some people still accuse you of being selfish and miserable for not starting a family. Reminds of the Hugh Grant movie, "About a Boy". But now I am getting way off the subject.

MRGALT2U 07-21-2003 03:09 AM

Re: Welcome Young Dreamers!
I never got all goo-goo eyed over other people's
babies either, and I respect other's decisions to have
kids or not. However, I can tell you it's all different when you have your own. They are expensive, frustrating, a worry, and many times a disappointment.
Then they go off and live their own lives, frequently
ignoring their parents. Let me put it this way. During
my divorce my former spouse said that she felt she had wasted 32 years. My response was that I did not feel
that way at all. The kids alone were worth it. Anyway,
it (parenthood) should not be entered into lightly.
It usually is however.

panhead 07-21-2003 11:38 AM

Re: Welcome Young Dreamers!
Ahhh, the subject of kids, this is always a tough one. I have pretty much opted out of having kids in the future as well, even if I do get married. Bushwacker, I agree, lots of people have viewpoints on this and are all too willing to tell you that you are wrong not to have kids and are being selfish. If that's the case, fine, I'd rather be selfish and happy than the other way around ! Of course, I'm open to changing my mind on this in the future. This is a passionate subject and always stirs up much debate.

Bushwacker, I'm very interested in what you did after college, and what the new career is now. I'm currently an engineer professionally, but have boatloads of other hobbies, many of which I make some money at. I've thought of making a living off of em', but it looks like I'd work twice as much and make half as much money ! Of course, I might be happier. Anyway, if you'd like to elaborate, I'll be watching.


ChocoKitty 07-29-2003 10:35 AM

Re: Welcome Young Dreamers!
I've always wondered what there was to debate about re: the kids issue. I've opted out myself. It isn't anyone's business but my own, really. People are entitled to their opinions, but I'm free to ignore them because they're not the ones who have to deal with MY decisions about MY life.

Panhead, what hobbies do you make money off of? It's nice when you occasionally get paid to do something you love, isn't it?

panhead 07-30-2003 06:02 AM

Re: Welcome Young Dreamers!
ChocoKitty writes:

"I've always wondered what there was to debate about re: the kids issue. I've opted out myself. It isn't anyone's business but my own, really. People are entitled to their opinions, but I'm free to ignore them because they're not the ones who have to deal with MY decisions about MY life. "

Yup, exactly. everyone has their own viewpoint on kids and everyone seems pretty passionate about it. Some like to try to drive their passion for having/not having kids into you. Like you say, not their business. I like the way you think !

As for hobbies that make money, most of them started out as things I was doing as a kid. I've alway been into motorcycles and cars. My father was into them and got me started very young, about 6 years old. We used to buy old dirt bikes that were broken for very cheap, get em' running, fix em' up and sell em' That's how I finanaced bigger ones later. Cars were the same. When I was 15 we bought an old muscle car to fix up. Had a lot of fun doing this, so we bought some other cars to fix and sell. Some I made a lot of money on, some I barely broke even with time spent, and some I lost a little.

When I went to college, I often worked on other peoples cars for extra $$. I can swap/rebuild motors, transmissions and rear ends and about anything else. I know how to weld and use torches, so that comes in handy as well. I can get by on a lathe, but I'm by no means an expert.

So now, I only work on things I like. This has mainly come in the form of Harley Davidson motorcycles. I occasionally pick em' up broken and cheap, fix em' and sell em for money. I've found some decent car/trucks like this as well. I don't like working on other peoples stuff very much, but occasionally I'll pick up a job if it pays VERY well. I got $100 for doing an hours work recently. I also buy/sell other types of motorcycles when the price is right. Japanese bikes need to be very cheap to make money on them though.

I'm not sure how much I make a year doing this. probably anywhere from $5000 to $10000 part time. It pretty much just finances my hobby. I thought about doing it for a living, but it looks like I would make a lot less for a lot more work, and it might ruin my love of my hobby. Later, I'll do it part time for some extra $$ in retirement, which will hopefully let me get out a little earlier.

How about everyone else out there, do you have any hobbies which bring you $$ ? Planning on continuing these into retirement to finance it earlier ?

bushwacker 07-30-2003 06:58 AM

Re: Welcome Young Dreamers!
Ah, back on-line again. It felt weird to not see a computer for 10 days. :D Chocokitty and Panhead, I think we are in the minority about the kids. But like you said, it is nobody's business but your own. The only other person you need to worry about is your spouse/parnter. But therein lies another problem: finding someone intelligent, attractive, considerate, and kind who is also not itching to pop out the puppies. It's hard enough finding someone with whom you are compatible. What have your experiences been when discussing this with people you are dating?

It's sad, but I know several people who were "nudged" into parenthood by a partner who couldn't wait and decided to "forget" to take their pills. Most of them admitted it later after the marriage deteriorated. I can't believe someone would toy with a child's life that way, but it happens. BTW, I don't mean for that to sound sexist. It's not just a female thing; it was just a bc pill in these cases.

bushwacker 07-30-2003 10:38 AM

Re: Welcome Young Dreamers!
Oh......Panhead, you had asked about my jobs. After I realized I was not Tiger Woods, I admit that I took a job primarily b/c the money was too good to pass up. But it was a miserable environment. I hated it and decided money is not everything. The day I left I promised myself that my next job was going to be enjoyable no matter what the pay, title, or prestige. This may sound crazy for a college graduate, but I became a pet sitter. I love animals, and it was the most enjoyable work I've ever done. It gave me a fresh perspective and renewed my resolve.

It is hard to pay the bills walking dogs, so I needed to move on. I knew I wanted something with plenty of freedom and an entrepreneurial flavor. Sales sounded like the ticket, but all the best positions required experience of course. So I started out doing entry-level, "hard-sales", where they teach you how to be a "closer". It's not something I would want to do for very long, but it was neat to learn what the salesman is thinking while he is throwing you his pitch. Plus, it gave me the experience I needed to get into more relationship-based, account exec type sales. That is what I do now, and I love it. If you are not happy in pure engineering, I would suggest exploring technical sales (industrial or computer). It would utilize your knowledge and experience, but still give you the independence and freedom that most FIRE types crave.

It's great that you can make some extra bucks on your hobbies. That sounds like the perfect gateway to ER. I'm envious! But I think you are wise to avoid using them as a full-time support vehicle. I'm all for following your bliss, but it could also make you lose interest in working on cars & bikes altogether. And you would have to find a new hobby! I couldn't believe it when my mechanic told me that he did not even work on his own car. Why? He did not have the time. He was too backed up with cars he never even got to drive.

bongo2 07-30-2003 01:54 PM

Re: Welcome Young Dreamers!
Hi all. I'm 31 years old, married with three 3-year old children (yes, triplets!).

Possibly the biggest driver of my financial health has been Tobias' modestly titled "The Only Investment Guide You'll Ever Need." Tobias explains, quite convincingly, that the first few dollars you "invest" should not be in stocks or bonds, but in your own life. Paying down debt, going to school, and purchasing staples on sale are all examples of "investments" that will pay many times what you are likely to get in the stock market. My early financial planning years were also heavily influenced by "The Wealthy Barber." Because of these two books I left school with a few thousand dollars in the bank, rather than the more common several thousand dollars in debt. The typical run-up of debt in people's 20's has to be one of the largest impediments to financial security and early retirement. A healthy aversion to consumer debt is vital to financial health.

I got married at 23 and entered the real world after a brief try at a doctoral degree in mathematics. While I haven't had much use for topology or functional analysis after leaving, school did teach me how to live on $10-12k a year. Keeping Tobias' plea to savor the anticipation of large purchases in mind, I resolved to increase our standard of living slowly rather than dive into the typical American habit of leaving a trail of money wherever I go. At some point I also read "The Tightwad Gazette." Dacyczyn's tips are often too extreme for my taste, but I find her ruthless frugality inspiring. That book also lead me to "Your Money or Your Life" and the formal idea that you should think of each dollar you spend in term of the amount of time that it took you to earn it.

Like btbrors when I was 25 with 6 months salary in the bank I looked at my spreadsheet and thought there was no way I would need to work past 35. Saving over 50% of my income and spending less than I paid in taxes, it seemed easy to amass 20 years expenses in a short while even under conservative investment assumptions. For a couple of years everything was sweet, and pushing 30 I had 7-8 years expenses saved, a house with no mortgage, and a new job that paid about three times my starting salary just a few years before. Then the financial tornado hit.

The turn of the millennium gave and it took away. I was blessed with three wonderful children, and a raft of associated expenses including a new house. I lost almost half my income when my wife left her job, and ultimately 30% or so of my investments.

With that behind me, I have resolved to get my financial life in order and get back on track to FI/ER. Step 1 for me is going to be figuring out what I'm spending and where -- something I used to know very well, but have not been able to keep track of lately. I'll figure out the other steps after that one. My new near-term goal is not complete retirement. In the next couple of years I want to either switch to a job that I find more fun without worrying about pay, or take an extended leave of a year or so. The current projection for full retirement is the same ten or so years away that it was seven years ago, and if I opt for some early financial flexibility, then it's probably more like twenty.

Jack 07-30-2003 05:54 PM

Re: Welcome Young Dreamers!
Not to burst your bubble, Bongo, but (as I'm sure you must realize) decent private college education will be around $200K per kid by 2020.

dennis pack 07-30-2003 10:40 PM

Re: Welcome Young Dreamers!
Need some advice.I am 36 years old.Live in California.I own a home worth 400,000.OWE 320,000.Have 10 acres that is paid for and can sell today for320,000. I own a home in kentucky worth 180,000 owe 140,000. I want to sell the 10 acres pay off the house in kentucky and rent my home out in california till the renter pays off my home and then use the rental income as retirement income.Would be semi retired working my own bussiness to cover medical etc.Retire at 52.I have been working hard at this goal.Need someone older and wiser to let me know if i am going the right direction.

Cut-Throat 07-31-2003 03:43 AM

Re: Welcome Young Dreamers!
What I would do is sell the 10 acres and pay off the home in California. Sell the home in Kentucky and invest the profit.

If you're 36 now and want to retire at 52, you've 16 years to save like crazy and invest.

I would not want to go into the landlord business.

MRGALT2U 07-31-2003 04:08 AM

Re: Welcome Young Dreamers!
I would also sell the 10 acres, and the Calif. house.
With 16 years to go, you can easily retire at 52 (you'll have to move though). I love
the landlord business, but no longer have the energy for it, plus it ties you down to illiquid assets. But if I was
36 I would go back into real estate in a heartbeat.

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